Argentina’s Government has announced that it will slash the value of its currency the peso, by more than 50 percent against the US Dollar as its new far-right president seeks radical solutions to fix the country’s worst economic crisis in decades. The new president of Argentina Javier Milei, and his economic minister announced the painful measures on December 13, 2023, saying that Argentina needed to avoid catastrophe.
Devaluation of Peso
The devaluation would drop the value of the peso from 400 to the dollar to more than 800 to the dollar, a blow to tens of millions of Argentinians already struggling to make ends meet. Economy Minister Luis Caputo announced a raft of various other measures including, sweeping subsidy cuts, cancellation of tenders for public works projects, and a plan to ax nine government ministries. However, the government plans to double the social spending for the poorest to help them absorb the economic shock. “For a few months, we are going to be worse than before,” Caputo said in his address. “If we continue as we are, we will be heading towards hyperinflation,” he said.
The planned measures drew praise from the International Monetary Fund (IMF) to whom Argentina owes $45 billion. However, a sharp criticism came from various sections of the society and activists. The Left-Wing activist Juan Grabois said that Caputo had declared this to be a social murder without flinching like a psychopath about to massacre his defenseless victims.
“Your salary in the private sector, the public sector in the popular, social and solidarity economy, in the cooperative or informal sector for retirees and pensioners, will get you half in the supermarket Grabois said. “Do you really think that people would not protest?
Jimena Blanco, the chief analyst with the risk consulting firm Verisk Maplecroft, said Milei’s government was trying to temper an otherwise armed guaranteed economic crash landing. “He promised a very tough pill to swallow and he is delivering the pill,” she said. “The question is how long will popular patience last in terms of waiting for the economic situation to change, she said.
The economic overhaul is part of the new strategy by Milei, who was sworn in on December 11, 2023, and has aggressively sought to tackle the fiscal deficit he believes is the root of Argentina’s woes. A self-described anarcho-capitalist, Milei argues harsh austerity is needed to put Argentina back on the path of prosperity and that there is no time for a gradualist approach. However, he has promised any adjustments will almost entirely affect the state, rather than the private sector.
Argentinians disillusioned with sky-rocketing inflation and a 40 percent poverty rate have proven surprisingly receptive to his vision. Still, Milei’s roadmap is likely to encounter fierce opposition from the left-leaning Peronist movement’s lawmakers and unions it controls whose members have said that they refuse to lose wages.